Q: Is it legal to reduce an employee's commission for not meeting performance standards?

A: That’s a good question, especially when you're trying to ensure fairness while maintaining clear performance expectations. In Massachusetts, commissions are considered wages under state law, and once they are earned, they generally cannot be withheld or reduced unless the conditions for earning them are clearly outlined in advance and agreed upon in writing. Since your employee signed a pay plan that includes the potential reduction based on a measurable standard, that’s a strong point in your favor—*if* the policy is clearly defined and consistently applied.

What matters most is whether the commission reduction is tied to a legitimate, pre-established condition and not implemented retroactively or arbitrarily. If the plan clearly states that a portion of the commission is contingent on meeting a performance benchmark, and the benchmark is measurable (like a customer service score), then the reduced amount may be considered unearned rather than a deduction from earned wages. However, if the full $10,000 was already earned and then reduced after the fact, it could raise legal concerns under Massachusetts wage laws.

To stay on the safe side, make sure the pay plan language is clear, transparent, and provided before the commission period begins. Keep documentation of the employee’s agreement and make sure the policy is applied equally to all team members. You’re doing the right thing by checking—it shows that you’re committed to balancing business goals with legal and ethical standards.